Kenya’s tea earnings for the 2016/2017 financial year are likely to drop following prolonged dry spells that led to depressed tea output, the Kenya Tea Development Agency has said.
Chairman Peter Kanyago yesterday said global tea prices have remained relatively low compared to the previous year, leading to reduced net earnings.
“While there are still a few months remaining in the year, there is a slim likelihood that we shall beat last year’s record,” said Kanyago.
He was speaking at this year’s induction for newly elected directors where he observed that the tea business is cyclical in nature.
“One year could be great, the next is depressed,” he said.
Kanyago called on directors to ensure continuous farmer education, especially on sustainable agriculture and financial management, to ensure farmers are experiencing growth year on year. During the 2015/2016 financial year, farmers took home Sh44.72 billion in second payment, an average of Sh36.26 per kilo of green leaf, compared to Sh27.61 paid out the previous. year.
Kanyago said challenges such as high cost of production, fluctuating exchange rates and auction prices, declining individual holdings and high cost of credit, continued to impact farmers, factory companies and KTDA itself negatively. He attributed the tea industry’s success to the KTDA structure, which has acted as a buffer against external political interference.
“All 560,000 small holder farmers working together under the KTDA umbrella has given us a lot of leeway in negotiation both locally and globally. Fundamentally, through the KTDA arrangement, our farmers enjoy economies of scale and shield each other against economic and political shocks,” said Kanyago.
He urged the newly elected directors to “jealously guard the gem” that is KTDA from those agitating for its split or reversal to the government. Without KTDA, he observed, there can be no small holder tea industry.
KTDA chief executive Lerionka Tiampati asked the directors to offer effective leadership, adding that the management team will work with them to efficiently manage factory companies on behalf of the shareholders.
“Farmers need leadership. They want to know that the person they have elected to lead them is fair, just, courageous, knowledgeable, energetic, present and a perpetual team player,” he said.